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Types, Size And Scope Of Organization | Tesco Retail Company

Introduction

The business environment seems to be the total of the internal and external factors which can influence the business. The external and internal factors can be influenced by each other and can work together as well. The overall project contains two assignments, discussed on organizational size, scopes and types and business environment as well. As per the case scenario, the learner has been asked to conduct a business report by analysing the present market condition.

For conducting the assignment with some practical examples, a realistic business organization has been chosen. Tesco UK has been selected in this regard. It is a multinational grocery as well as a retailer of general merchandise in UK. It has been declared as the third biggest retailer in the world by its profitability aspect. They have 6,553 stores in 12 nations across the Europe and Asia. More than 476,000 employees are presently working with the company in its different stores. The yearly revenue and operating income of this organization are £55,917 million and £1,280 million respectively (Tesco.com. 2017).

Tesco Logo.svg

scopes and types and business environment as well. As per the case scenario, the learner has been asked to conduct a business report by analysing the present market condition.

For conducting the assignment with some practical examples, a realistic business organization has been chosen. Tesco UK has been selected in this regard. It is a multinational grocery as well as a retailer of general merchandise in UK. It has been declared as the third biggest retailer in the world by its profitability aspect. They have 6,553 stores in 12 nations across the Europe and Asia. More than 476,000 employees are presently working with the company in its different stores. The yearly revenue and operating income of this organization are £55,917 million and £1,280 million respectively (Tesco.com. 2017).

Tesco Logo.svg

Figure 1: Logo of Tesco

(Source: Tesco.com. 2017)

 

 

Assignment 1:

Task 1:

1.1 Explaining different types of organizations, public, private and voluntary sectors and legal structures (P1)

Figure 2: Different types of organization

(Source: Forés and Camisón, 2016)

According to Brandsen and Honingh (2016), an organization should be considered as the formal structure of responsibilities, authorities and relationships by which particular objectives can be achieved. Three different types of business organizations are there. They are public, voluntary, private organizations. The state or the Government id the owner of the public sector. These organizations are being financed by the amounts of taxes that have been paid by the people. The main purpose of these organizations is to provide, On the other hand, the private organizations are being controlled by the private individuals. Sole traders, companies, partnerships and franchises are being considered under these organizations. The main purpose of this sector is to increase the profit level.

Eesley et al. (2016) have opined that the voluntary organizations are not being owned by the individual people. However, as the person needs to take the responsibility to ensure that the budget, as well as targets, would be set. These organizations always try to help the people. Other than that, while discussing the legal structure of the company, it must mention that this is the first thing that should be done after establishing the business. Different types of legal structures are the sole partnership, partnership, limited partnership, limited liability company and corporation. In case of Tesco, it was a sole business which has been flourished to a corporate house later on.

1.2 Explaining the size and scope of organizations (P2)

As stated by Cohen (2017), Industry Revolution has extended the scope of all the business organizations. In this part of the project, various scopes of business organizations have been discussed. In the sole proprietorship, entrepreneurs invest own capitals. The owner here is the financier, organizer, decision maker, operator, controller and obviously sole responsible for success or failure of the venture. On the other hand, in the partnership business, each of the partners needs to invest capital, labour or management. In the joint stock company, the organizational work has been started before the amalgamation of promoters.

Boon and Wynen (2017) have pointed out that a firm can be expanded due to several reasons. The size of the firm can be measured through its net profit, turnover and numbers of workers. For example, Tesco has been considered now as one of the largest retail stores in the market. Its £(54) million turnover is the proof of its success (Cohen, 2017). Even, it has been already mentioned that large numbers of employees they have in their several stores as well.

1.3 Analyzing the link between objective and products and the size and scope of the organization (M1)

Boon and Wynen (2017) have commented that the number of employees has been determined almost at the time of its planning. Usually, a small business has limited number of employees. On the other hand, the common structure of a large corporation should be tall with various vertical levels. Work specialization is a factor that has been massively impacted by the size of the organization. It determines the way in which the tasks would be subdivided among the employees. Organizations like Tesco has the high level of work specialization as it has sufficient employees to distribute the job among them.  

 

 

Task 2:

2.1 Explaining the relationship between organizational functions and organizational objectives and structure (P3)

The business structure can be set up to the function of the organization. Actually, it is better to say that the organizational structure and functions both can influence each other. Rozman (2017) has stated that most of the businesses may adopt a functional structure of the organization. Different departments have been allocated by several responsibilities. In the divisional structure, the organization may spread its functions across several branches. The matrix structure in the business should provide greater flexibility in its business functions. However, in case of Tesco, they are using the functional structure as they have distributed the responsibilities among all the departments and the work is being continued based on it. 

2.2 Analyzing the advantages and disadvantages of interrelationships between organizational functions and its impact on organizational structure (M2)

Advantages

Disadvantages

Specialization:

The functional structure of an organization offers the higher level of specialization. Each of the units has been treated as a self-contained mini company, and they are responsible for carrying out the specific role. For example, in Tesco, the finance department is responsible for monitoring all the financial transactions whereas the sales department only supervises and perform the activities related to a sale.

 

Deficiency in teamwork:

Parke and Seo (2017) have opined that while a specialized unit in functional structure performs with high efficiency, they may face problems while working with other units. For example, the customer care unit of Tesco may have the problem if they are being asked to work with finance department together.

Productivity and efficiency:

An efficient workers can perform tasks with high quality and speed. It enhances the productivity of the company. For example, the efficient staffs of Tesco are experts to handle the customers. They can satisfy them with their services, and that is why it has a huge number of loyal customers with it.

Difficulties in management control:

Carlson (2017) has stated that the functional structure of organization for the top management to take control over the staffs while the organization may be expanded.  

 

Table 1: Advantages and disadvantages of interrelationships between organizational functions and the impact that can have upon organizational structure

(Source: Created by author)

2.3 Critically analysing the complexities of different organizational structure and functions (D1) 

Chapman and Ching (2016) have commented that the sole proprietorship is the simplest structure. It is not at all much complicated as the tax aspects; the business is included in the personal tax return of the company.  The partnership has some complicacies as it is being owned by several people. Therefore, it is needed to have a look on its structuring. On the other hand, the corporation structure is more complex. It is an independent and legal entity and completely separate from the owners. Therefore, it needs more tax requirements and regulations.

 

 

Assignment 2:

Task 1:

1.1 Identify the positive and negative impacts of macro environment on business operations (P4)

Elbanna et al. (2017) have opined that the economic performance can be influenced by the diversified factors of the macro environment. Some factors of a macro environment such as interest rate, inflation, income and wealth, etc. have both the positive and negative impacts on the economy.

Inflation and deflation: Inflation seems to be the rise in the cost of goods as well as services decline. The spending of a low customer has been slowing down the economy, and it has become unsuitable for any business. On the other hand, deflation seems to be the general decline of prices. It influences the unemployment as well.

Interest rate: Lacasse (2016) has discussed that the interest rate basically determines the money flow in businesses. High-interest rate decreases the demands for the money.

Employment level: It has a positive impact on the economy if the employment rate is high. It enhances the consumer spending level as well.

Foreign exchange rate: The exchange rate have a great effect on the national economic scenario. The lower exchange rate would affect negatively on the domestic businesses. 

1.2 Applying appropriately the PESTLE model to support a detailed analysis of the macro environment within the selected organization (M3)

PESTLE is the abbreviation of political, economic, social, technological, legal and environmental factors of business. Here the learner has composed a PESTLE analysis of Tesco which would help to understand the external scenario of the company.  

Political

The organization claims that no political issue is there with them. Yet. The company has been alleged to donate money to the political parties and try to influence the government as well.

Economic

This company is economically strong enough, but it has faced the downturn during the recession only.

Social

People have changed their lifestyles, and Tesco should maintain their product ranges as well thus the changed lifestyle can be complimented.

Technological

Rahman (2015) has opined that the company has invested minimum 10% of its revenue for implementing advanced technologies within the organization.

Legal

Tesco law has been planned to provide the legal guidance to the customers visits the supermarket for shopping. The company has not taken part in any legal activities till now.

Environment

Tesco has collaborated with Global Action Plan and has employed number of young people by providing proper training. Other than that, it has helped the mushroom supply manufacturing firm as well.

 

Table 2: PESTLE analysis of Tesco

 (Source: Rahman, 2015)

 

 

Task 2:

2.1 & 2.2 Conducting internal and external analysis of the selected organization and inter relationship with external macro factors (P5, P6)

The external analysis of a firm can be done by composing a PESTLE analysis of it. However, from the PESTLE analysis, it has been ensured that the company is strong enough from the economic, technological as well as environmental factors. Therefore, these two would be the external strengths of it. Similarly, they have to focus on their legal, political and social factors of the operation as there have some areas to take care immediately.

Other than that, from the internal concept, the primary strengths of this company are it has won several awards for excellent service in the retail sector, it has a brand name which is famous in the market, technological usage has been made the operation stronger. Bohari et al. (2017) have discussed that some internal weaknesses are also there, for example, the subsidiaries of the company are not working well. Other than that, the company is mainly depended on the Europe and UK market. They are not trying to expand the business to other places as well.

2.3 & 2.4 Applying appropriately SWOT analysis and justify how they influence decision making in the selected organization (M4, D2)

The learner has decided to apply SWOT to analyze the internal situation of Tesco. Bohari et al. (2017) have commented that SWOT refers to the analysis of strengths, weaknesses, opportunities and threats of a business organization. The result of Tesco's SWOT analysis is as follows:

Strength:

  • Largest as well as most profitable retail chain worldwide
  • Considerable brand equity

Weaknesses:

  • Recent controversy has led negative image to media and public
  • No strong presence in other nations

Opportunities:

  • Rebranding as the champion stores with the help of digital advertising as well as promotion
  • Entering into the market of developing countries
  • Increasing the sale of non-food items

Threats:

  • Increasing rate of raw materials for both the non-food and food items would decrease the profit line
  • Maintaining the low-cost operation
  • Increased competition in

The decision making process of the company should be influenced by it as while developing the plan for the company; they would focus on the loopholes those have been identified through SWOT analysis. Therefore, they would focus on the threats and weaknesses for what they need to develop new strategies by correcting them.

 

 

Conclusion

It has been identified that several areas are there where Tesco should focus thus their business opportunities and profit levels can be increased. Other than that, this project has analyzed the macro environment as well which would indicate the external factors of the company where a further review is needed. However, in this project, both the factors have been discussed elaborately. Additionally, the impact of both the factors on business has been narrated here.